"We expect the company to deliver earnings at a CAGR of over 30 percent in next 2 years," says Akash Jain, Vice-president, Equity Research at Ajcon Global Services.
In Future Supply Chain Solutions, we expect target of Rs 750 in the near term. Investors can do SIP in this company as it is a strong play on the underpenetrated in 3PL logistics sector owing to increasing needs of manufacturers and ecommerce players.
The company is a major beneficiary of increased demand in third party logistics (3PL) and has been maintaining expected growth trajectory. We believe goods and services tax (GST) will be a huge enabler to improve supply chain efficiency.
The company’s business model is unique and is different from other logistics players. It mainly focuses on contract logistics (70 percent of revenue) rather than movement of goods (65 percent of industry revenue). The company provides end to end services from warehouse/distribution centre to the end consumer.
With regards to recent acquisition Vulcan Express, it will provide synergy in the form of providing last-mile delivery connectivity. Vulcan Express is using 40 percent capacity currently
The company is witnessing good traction with existing and its new customers. We will see growth momentum continue going forward. What is interesting to seed that the Company has an asset light business model which will ensure free cash flow in coming years. Additionally, the company enjoys superior return ratios and we expect ROCE in the range of over 35 percent in the next 2 years. We expect the company to deliver earnings at a CAGR of over 30 percent in next 2 years.Disclaimer: The author is Vice-president, Equity Research at Ajcon Global Services. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.